As more countries require mandatory coverage in case visitors fall ill from the virus, COVID-19 insurance policies are increasingly becoming an integral part of vacation requirements which is creating opportunities for insurers.
Airline bookings are on the rise in some regions, driving cautious hopes of a revival in traffic. But it also raises fears among tourist destinations of getting hit with bills in case the vacationers become stranded due to the virus.
More than a dozen countries from Aruba to Thailand require COVID-19 coverage for visitors, with Jordan becoming the latest to consider such protections.
The market for all types of COVID-19 travel coverage is estimated to be between $30 billion to $40 billion a year, according to global travel insurance consultant Robyn Ingle.
COVID-19 insurance benefits typically cover treatment up to $100,000, and could include coronavirus testing costs and services like evacuation or local burial or cremation. These benefits, introduced by insurers in mid-2020, are sold either as add-ons or as separate policies with coverage for illness or quarantine.
Jeremy Murchland, president of Indiana-based travel insurance company Seven Corners, said travelers are now “more likely to insure their trips,” as more countries require COVID-19 coverage. A travel insurance plan that includes trip protection, medical expense coverage for COVID-19 and protection for baggage and personal effects typically costs 4 percent to 8 percent of the dollar value of the trip, Mr. Murchland said.
While the pandemic has affected travel, demand for coverage has created opportunity for the hard-hit insurance industry and a niche to develop new products, companies said.
It is not clear how coverage demand will evolve as many more people become inoculated against the coronavirus with vaccines.
Will it last?
Frank Comito, a special advisor to the Caribbean Hotel and Tourism Association, said some budget travelers have complained about mandatory coverage. And some countries could discontinue or relax the requirement as “we move away from the pandemic.”
Rifai, former secretary general of the UN’s World Tourism Organization, said he expects countries will continue requiring coverage as the vaccines “will take years” to roll out globally.